Fighting about money is one of the top reasons for divorce in America. But if you're in debt, there are several steps you can take to get your finances back in the black -- and help your marriage stay on track.
Financial expert David Bach, a partner at The Bach Group, which manages over half a billion dollars of individual investors' money, offers the following action plan for resolving debt:
"If you don't have a joint checking account that pays all the household bills, start one now, along with a 'his' checking account and a 'hers' checking account," says Bach, author of Smart Couples Finish Rich (Broadway, 2001). Sit down and figure out how much each of you must contribute each month, then establish a joint account that is automatically filled from the his and hers accounts.
Get rid of revolving credit now! "Cut up any credit cards you have and, if you must, use American Express or a debit card responsibly and wisely," Bach says. "I only use American Express."
Make a budget for paying off credit card debt -- and stick to it. "Most people can't pay it all off at once, so don't stress over it," says Bach, "just keep paying it off every month."
Cut out all incidental spending. "I know it's hard to give up what I call 'the latte factor,'" says Bach. "But if you stop buying a $2.50 cup of coffee each day, and stop all other unnecessary expenditures, you could potentially save a thousand or more a year, which you could then use toward paying off your debts."
Re-evaluate where you may be able to reduce your overhead. Could you find a less expensive apartment to rent? Could you make it easier to pay the mortgage by renting out a room in your house? Could you save a hundred dollars a month on grocery bills by giving up costly cuts of meat and other food luxuries?
"Make sure that your fixed overhead is at least 10 percent less than your net take-home pay," says Bach.
If you feel overwhelmed by your debts, ask the wealthiest person you know for a referral to a financial planner.
